THAILAND AND NORTH CAROLINA: PARALLELS IN ECONOMIC DEVELOPMENT

Khao Lak Merlin Hotel, Phang Nga Province, Thailand (November 17, 2006). Make no mistake about it, there are countless differences between Thailand and North Carolina, and any attempt to compare the two necessarily invites superficiality.

But Thailand and North Carolina do have some noteworthy similarities. Let’s start with geography.

Like North Carolina, Thailand has a mountainous region – long the home to isolated, independent-minded people with their own distinct cultures and values.

Thailand also has its own coastal region, home to some of the most spectacular scenery and most beautiful beaches in Asia. Sound familiar?

And Thailand has its urbanized, industrial center, which developed based out of an agrarian economy capable of producing workers for low-wage manufacturing and textile and apparel-making jobs.

And, Thailand’s industrial economy has suffered as China and its less-advantaged neighbors to the east in Vietnam and Cambodia have expanded their production capacity and begun to capture the market for lower wage manufacturing.

Suddenly, Thailand, which boomed in the 1980’s and early 1990’s, has found its role in the region’s economy in flux. It now grapples with how to compete in a 21st Century globalized economy. Its emphasis has shifted from low-wage manufacturing to higher value-added activities. Rather than cut and sew garments, it must become a fashion leader. Rather than just produce handicrafts, it must ride the swells of popular culture and predict and produce trendy designs. Instead of simply growing rice, it must transform itself into a processed food center hub – the “Kitchen of the World.”

It is now required to differentiate itself by delivering an educated workforce capable of handling more complex manufacturing processes. And its people must become more self-sufficient – better at developing their own businesses, spotting market opportunities, and generating their own wealth.

So what have I been doing since I arrived here? Mostly meeting with officials and businessmen to learn what is happening in Thailand’s economy and, indirectly, the world at large.

Needless to say, in the wake of the recent coup, there is a certain amount of national soul-searching going on, and that fact is reflected in my meetings. The interim government, installed by the military (which promises to step aside as soon as a new constitution is in place and free elections can be held), has emphasized the need for Thailand to develop a “sufficiency economy” that focuses as much on “gross domestic happiness” as on “gross domestic product.”

When I hear Thai officials speak of this goal, it is clear many of them are wrestling with this vague concept, which originated with the King. They are doing their best to understand how such a loosely articulated goal might mesh with the mission of their particular ministry, department, or division.

It’s funny, really, because the term has only the meaning to which people ascribe it. It's sort of a national Rorschach Test for where the Thai economy may be headed. The efforts of government officials to define the term and make it relevant to their work probably reflect a universal tendency to take broad, general themes (e.g., “One North Carolina”) and strive to give them meaning and translate them into action in daily life.

I’ll write more later about Thailand’s current “Sufficiency Economy” focus because I think it provides a fascinating glimpse into the challenges that developed nations face in a world of free and globalized trade. Some might call it a uniquely Thai response to the new world order, but I think it has broader implications that all western economies should reflect upon.

But that’s just philosophical noodling. What have I actually been doing? (a question the Secretary has no doubt been asking himself).

I began my meetings with representatives of the Thai Federation of Industries, where we discussed in particular the significance and challenges of workforce training. I followed that by meeting with the officials of the Ministry of Labor’s Skills Development Department. I met there with beautiful and charming M.L. Puntrik (granddaughter of one of Thailand’s kings, no less) and her dedicated staff involved in workforce development and entrepreneurship training. I have also met with officials at the Kenan Institute directly involved in transportation planning, clusters planning and the development of regional economies.

I have discussed the particulars of rebuilding the economy of Thailand’s western coastal provinces in the aftermath of the 2004 tsunami (yet another another North Carolina parallel – devastating natural disasters that wreck fragile rural economies). I met with Charlie Blocker, a former North Carolinian who worked at Wachovia years ago, but jumped at the chance to ride the wave of capitalism in the suddenly market-oriented economy of Vietnam. His current company, Gannon Realty, is helping underwrite the cost of developing a capital project (a new fishing pier and related facilities) to serve as an asset for small businessmen engaged in fishing in the Phang Nga province. I traveled to Phang Nga to meet with representatives of the Kenan Institute and with the provincial government tasked with doubly difficult job of trying to develop a tourism-oriented economy that benefits the local residents while at the same time aiding in the recovery of one the most damaged regions hit by the 2004 tsunami.

I’ve talked with the infrastructure divisions of the Bangkok Metropolitan Administration about the city’s considerable urban challenges, and I have met with a developer of one of Thailand’s “industrial estates” – unique, government-sanctioned or sponsored business parks that do not really seem to have a clear analog in the United States. I’ve also met with policy experts in the country’s Board of Investment – the Thai equivalent of North Carolina’s division of business and industry.



My impressions from these meetings are still fluid. As I told Mike Luger after meeting with him prior to leaving on my fellowship, I am “still in the ‘dot-collecting’ phase of my work.” In other words, I haven’t learned enough to start ‘dot-connecting’ yet.

My surface observations, however, are clear enough.

People, and challenges, seem to be more alike than different.

The complaints I hear from the leaders I have met with sound remarkably similar to those I hear on a daily basis in North Carolina:

· Business complaints that government doesn’t fully appreciate the skills needed by workers in the marketplace.
· The challenge of motivating students to seek industrial education through community colleges.
· The huge challenges of fragmentation, especially of economic development efforts.
· The difficulty of leveraging university assets and translating investments in ivory-tower research into practical real-world economic benefit.
· The questions about the role tax incentives play in business location decisions.
· The difficulty in justifying many government-issued small business loans from a pure “rate of return” standpoint (the number of NPL’s in any government loan program is high and “capacity to administer” issues are a major factor at all levels in the process).

I have been at this for only about two weeks now, and I have a long way to go in my fellowship. Stay tuned, and I’ll keep you posted on what I learn.